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A constitutional convention proposal: make a government of consumers and corporations

The founding concept of the US constitution placed most emphasis on the legislature consisting of two houses. In practice we quickly began to shift the emphasis to the executive and judicial branches so that now it seems the legislative process has become irrelevant except to allocate fund that they really have no choice but to approve. I believe the original concept was that the executive and judicial branches would be minor and nearly all decisions would remain in the legislature.

I like the idea of a democratic republic where all issues affecting the population would be debated in legislatures selected by the population. I also like the idea of two competing houses to address these questions from two viewpoints. The original intention was for the house to represent the population and senate to represent the states. These perspectives have a natural conflict that we want to find a balance for their competing claims.

Over time, this original concept was to make both houses represent the population to the point where instead of having 438 representatives, we have 538. The distinction between the two houses is that one is supposedly more deliberative than the other. I see little evidence of this, but it seems the best remaining justification for maintaining two separate legislative houses.

I like the original conflict of the people’s interest on one side, and the state’s interest on the other. Membership of the two bodies is naturally determined. Either you are an individual in which case you are represented in the house, or you represent state concerns in which case you are represented in the senate. The two sides will debate each other through the legislative process and each side will be guaranteed a voice in one of the chambers.

Today, however, we lost this natural distinction of interests. Instead our modern debates exclusively pit one group of individuals against another group of individuals and always about how to subjugate the state to serve the people. The modern interpretation is more democratic but it suffers by not giving due attention to the needs of the state. In particular, the debates lose a consistent voice defending against excessive state debts or defending against excessive constraints to build a robust economy. Today, we argue only about how to divide the spoils between (roughly) two groups of people.

One of the frustrations of the current debate is that there is not a natural permanent home for each of the two sides. Sometimes one party or the other control both houses and thus making the entire two-house concept redundant. Even when the houses are split, the two-house concept is redundant because both represent interests of individual people.

I would like to return to a two house concept where one is devoted to representing people and the other representing the state. However, there entire concept needs to be rethought because the modern concept of individuals and states has changed dramatically since the founding. We need to use different terms.

A new constitutional convention could consider a new approach to recreating a government where the power is concentrated in two houses and there being relatively minor roles for executive and judicial branches. The new approach redefines the constituents of the two houses.

I would propose two houses to be the house of consumers and the house of corporations (or producers). For the sake of argument, I will assume both houses have the same number of representatives of 10 times the number of states: currently 500.

Individuals in society will need to identify themselves as either corporate entities or consumers. By default, people are consumers. People are born as consumers. In order to become a corporate entity, they will need to register some corporate plan within a particular state and that registration requires proof of self-financing. Corporations may include industries, but it may also include individuals such as celebrities, or entrepreneurs. As long as an entity can self-finance, it can be a corporation.

This division determines how the individuals are represented in the government. A consumer is represented in the house of consumers and has no representation or influence on the house of corporations. Conversely, a corporate entity finds representation in the house of corporations with no influence or representation in the house of consumers. Both groups have permanent voices in all legislation.

The legislation process requires both houses to approve. For example, the house of consumers can originate certain categories of legislation that defines the interest of consumers. In this example, the house of corporations can agree or request changes. The non-originating house effectively has veto power over the originating house. The process works similarly for issues in interests of corporations but with the roles reversed.

I envision two executive positions: a president of the consumers and a president of the corporations. Each president, selected by their house, is charged to faithfully execute the laws that originate from the opposite house. For example, the president of consumers will faithfully impose on consumers those rules that originated from the interests of corporations.

To explain how this works, I need to describe the two populations.

Consumers

The consumers are people who have incomes to support their daily needs. They need regular cash flow from incomes to pay for housing, food, transportation, communication, entertainment, etc. This cash flow comes from the state in exchange for a commitment to be full-time employed in the role the individual qualifies for. The income is continuous even when the appropriate jobs are not available. However, the individual is obligated to accept a job as soon as one becomes available.

Consumers have an uninterrupted ability to consume items related to daily life. To make this happen, they always get paid directly by the state. But instead of a lump sum payment (in the form of salary or wage), the consumers are granted expense accounts with periodic spending limits (such as daily maximums for meals) for each category of expense. When the actual cost is less than the max, the state pays the producer exactly the amount charged and the consumer does not get the difference. We have the technology today to make this happen through something similar to a credit card but where the transaction verifies the daily spending limit instead of a credit balance. The consumer does not directly pay the producer, and the consumer does not need to fill in paperwork for expense accounting. In practice, this works pretty much the same as it does today for the many people who use credit or debit cards for their purchases. As long as the item cost falls within the set maximums, the purchase is allowed to proceed.

In this model, the consumers have no savings, wealth, or property. They do not need it because their expenses will always be covered. All purchases are either immediately consumed (like food) or rented. Items like clothing are recycled instead of sold second-hand. The consumers needs are always covered by their designated expense accounts.

I imagine this economy to work with different levels of expense accounts depending on qualifications (and willingness) to do certain kinds of work. I imagine a simple partition of expense accounts analogous to the Affordable Care Act metals: bronze, silver, gold, and platinum. I would add one more, granite to be below bronze.

All of the metal expense allowances have an obligation to work when appropriate work is available. The bronze level is the least qualified and will do jobs that require little qualifications. The higher metals require more education, credentials, and experience and their associated jobs will involve more responsibility and independent work. The higher metals have higher spending limits (they can afford nicer things) but they also have an obligation to do the higher level work when that work is offered.

People can move up in metals by acquiring more education, credentials, and experience. The individual’s investment is only in terms of time. The cost of the training will be covered by the government. For education or credentials, the time must come from outside of the working hours. Experience is gained on the job.

Similarly, people can move down in metals (or be demoted) when they prefer not to work in more demanding jobs or they refuse to accept the jobs that are offered.

Granite is a special level for minimum (but still decent) expenses for those who cannot work or refuse to work. This is the safety net category.

Consumers are assured a reasonable wage for life based on their qualifications. This answers the income inequality complaints because the income is replaced with expense accounts. Qualifications justify different levels of expense accounts and the house of consumers managers the spending maximums for the expense accounts.

As a quick aside, there is a need to encourage people to economize on their daily purchases or else everyone will focus all their buying power on the maximum allowed prices. A possible mechanism would be to give individuals credit of say 5 cents to the dollar saved. This accumulated credit would be made available to spend on top of daily maximums on designated federal holidays. Unspent credit would expire after 12 months. Consumers have an incentive to economize on their expenses and to look forward to extra spending on the holidays.

Producers

Producers or corporations are financially independent of the government. Proof of this financial independence is required to register as a corporation and to remain registered. The proof may be lines of credit, existing wealth, or merely a proven record of maintaining cash flow from delivering services. In general, corporations are what we normally think of as corporations: large businesses that operate to produce some good or service. However, individuals can be corporations if they meet the requirements for registration. Such individuals will include celebrities, corporate executives, sports stars, or self-employed entrepreneurs.

Producers have no access to expense accounts from the government. They survive on their own access to money. If they run out of money, they become bankrupt. For corporations, this means some kind of liquidation or reorganization. For individuals, this will mean forfeiting their corporate status and rejoin the consumers. There still remains a safety net, but to take advantage of it the producer will have accept an obligation to pay back the benefits in order to return to corporate status. Since consumers have no ability to save money, the failed corporate individual will need some other corporation to pay off this lien.

On the other hand, producers can spend their own money anyway they like. They are not subject to expense account maximums. They could save and splurge or they could spend at a steady rate. They are constrained only by their access to the funds.

Just as consumers are granted perpetual expense privileges in exchange for commitment to work, producer are granted freedom to spend their wealth that in most cases will require them to produce new things or services.

Producers may make money by selling their goods or services to other producers, but most of the time they will get compensated by the state for the goods provided to the consumers. The government pays the retail price for the services purchased by consumers as long as the prices is within the periodic spending maximums. This is cash for the producers to use as they wish.

Similarly, producers are relatively free of government interference for how they go about their business. Specifically, the independent individual is free of labor laws. He has an incentive to maintain safe practices because the safety net of reverting to consumer status could place him in lowest-level of granite expenses for those who can not work.

Meanwhile, producers will provide the jobs that hire consumers. Produces hire consumers through the government exchanges. The government sets the billing rates of the consumers’ labors based on their qualification and thus metal-level. The government becomes the labor contractor for the laborer from the consumer class.

Brief comment on change of status

As noted, individual bankruptcy will allow a producer to enter the consumer ranks. To transition from consumer to producer, the individual must pay a lump sum to compensate the state of any losses for this consumer period (a loss is an income without a compensating job). Consumers cannot save money so this sum has to be acquired from loans or grants from other corporate entities.

Every new birth (even from producer parents) immediately have status of being a consumer. By default, the state will pay for the expenses of the child. The producer has the option of immediately incorporating the child to have direct access to their funds but that will require paying a fee to the government and again limit that child’s access to consumer status in the future. The process should be designed in a way to provide an incentive for the producer parents to pay the corporation fee only after the child enters early adulthood when their financial-independence capabilities are assured.

House of Consumers

The house of consumers will originate legislation to set expense allowances and to the set labor laws for how each metal level can be employed.

The house of consumers are elected directly by the consumer voters. They have an incentive to maximize the expense allowances and favorable labor rules.

As mentioned, there are 500 districts. The districts are specific to each metal. The number of districts for each metal are proportional to the relative population for each metal. Granite is an exception where its districts are set to be as small number of at-large regions. For each of the metals, each district is defined with geographic boundaries so that each district has roughly the same number the residents of that particular metal status. The district boundaries are completely independent of state boundaries so that districts may cross multiple states.

There will be more bronze districts than platinum ones. The platinum districts will be larger so that within its boundaries there may be a number of districts for lower more populous metals.

The metal-specific representation allows for debates for how to allocate available funds into expense accounting. The higher metals have higher expense limits but they will have fewer representatives. The lower metals must agree on the reasonableness of the higher expense limits. Having four metal categories allows for negotiation to assure that the higher metals do get a reasonable deal for their higher obligations.

Note that the house of consumers sets the compensation in the form of expense limits. It must set these limits on the budget that is available to them. This budget comes from how much they get the producers to pay for the labor, or to pay in other taxes.

House of Corporations

The house of corporations originate legislation setting billing rates for various labor categories. They will also originate legislation for defining qualifications for different metals.

The house of corporations consist of 500 seats where each state provides 10 representatives. Each state will define their own set of 10 categories of industries. Industries in each category will select a representative to send to the house of corporations. Only corporations or individuals with corporate licenses can elect these representatives. The consumers have no say in who may represent corporate interests just as corporations have no say in who may represent consumer interests.

In contrast to the house of consumers with 4 nation wide categories for representation by metals, there may be many more categories of industries because there can be 10 categories per state and each state can come up with its own definition for a category. During any particular session, there may be coalitions of comparable industry categories between states but this can change over time.

Legislative process

As mentioned at the beginning, the goal is to give government back to the legislative process and return executive and judicial branches to minor roles. This concept proposes two houses that represent competing yet equally vital points of view refined as consumers and producers. These houses and the views represented are permanent and clearly understood. The house of consumers will always look out for consumers and the house of corporations will always look out for the producers.

The various types of legislation are assigned to be originated in the house that is most appropriate for that type. The originating house will define the legislation. The opposite house will approve or suggest changes that will make it more acceptable.

Legislation must pass both houses.

The executive process is focused entirely on faithfully executing the laws. There are two executives whose task is to execute the laws on the group with the burden to comply with the law. The executive of the consumers will execute laws that originated in the house of corporations. The executive of the producers will execute laws that originated in the house of consumers.

For example, an authorization for war may originate in the house of producers but the commander in chief will be the executive of the consumers (from whom the military will be manned).

Elections

Elections are focused on representation for each fixed seat. There will not be any competition to take over a branch. One house will always belong to consumers, and the other will always belong to producers. Within consumers, the number of seats for each metal are fixed at least in term of being proportional to their populations and each seat represents the same number of people as other seats in that metal. Within producers, the number of seats are fixed to 10 per state where each state defines industries to include for each seat.

This construct avoids the distraction of having to flip seats. Seats can not flip. Instead the focus is on finding the best representative for a fixed seat.

Summary

This post is a sketch of how to reconstruct government around two distinct legislative bodies each with permanent areas for responsibility. The houses are updated to use modern concept of consumers and producers that have emerged in the centuries after the original constitution. I defined the distinction of the members of each group using examples that may appear to be socialistic but in practice may result in experience indistinguishable from today (with most people living paycheck to paycheck). Obviously, the details will need to be worked out through the convention process, but the basic idea is to restore the role of legislative branches to manage government and to devote each house to representing naturally conflicting objectives of consumers and producers. This clarification of purpose can improve our debates by focusing on the essential issues. The current debates that are more focused on winning the majority of both houses will become irrelevant because there will always a house for consumers and another for producers.